Tracy pays $5M, gets Lathrop out from under water

LATHROP — For two years the City of Lathrop has been on the hook for water payments that a defunct developer initially agreed to cover.

And as of Tuesday night the payments - as well as a portion of the water - belong to the City of Tracy.

The Lathrop City Council voted unanimously to sell the rights to 2 million gallons-a-day of capacity from the South San Joaquin Irrigation District’s surface water treatment plant to Tracy. It was water that at one time was supposed to be paid for by Richland Planned Communities as part of its agreement with the city for its construction of a swath of homes on land surrounding what is now Lathrop High School.

When the market collapsed, Richland pulled out and left the city on the hook for a handful of unfinished projects and left them holding the bag on things like the surface water capacity that was supposed to service the residents.

A $5 million payment by the City of Tracy will go exclusively to cover the money that Lathrop had to shell out to keep that capacity afloat - the city was one of the original four that entered in an agreement for water from the plant when it opened in 2005.

The SSJID Board of Directors blessed the sale when they met last week.

Of the $5 million payment, $1.2 million will go to pay back money from the general fund used to make regular payments, and the remaining $3.8 million will go to cover bonds that were taken out as part of that project - effectively wiping out what the City of Lathrop is still on the hook for.

They’ll retain capacity for 1.82 million gallons-a-day for use in the Central Lathrop Specific Plan area, which, according to the staff report, will cover enough water for development of 730 acres - including 2,600 homes and 2.6 million square-feet of retail and commercial space. The water will allow development for 10 to 15 years.

Additional water could be made available as early as 10 years from now according to SSJID General Manager Jeff Shields, who spoke to the council about the sale and the proposed expansion of the surface water treatment plant.

While Shields said that he couldn’t guarantee that water would always be available for the community, he did say that the district has “committed our water to this county and enterprises in this county” and that he fights for surface water rights on a daily basis to make sure that they’re represented appropriately.

“We aren’t going to lose water rights on my watch, and we’ll be here to work with you,” said Shields - adding that the district has existed solely as a service provider and not a sales entity.